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l MONTHLY BUSINESS REVIEW 0 f the -------- ~ume 25, No.7 FED ERA L RES E R VE fi 0 fDa II a s This copy is released for publication in morning papers- Dallas, Texas, September 1, 1940 DISTRICT SUMMARY Consumer demand for merchandise in the Eleventh District declined by less than the average seasonal amount in July, and sales at reporting department stores were at the highest level for any corresponding month since 1929. Distribution of commodities through wholesale channels exceeded that of a year ago by 6 per cent. Petroleum output showed a further sharp decline, the production rate being 11 per cent lower f.ha n in July, 1939. Activity at petroleum refineries reflected Ittle change over the month but continued moderately below th.at of a year ago. Consumption of cotton at Texas textile mIlls increased to a level one-third higher than in the comparable month of 1939. Although the value of construction Contracts awarded showed a marked decline from the all-time peak recorded in June, private construction increased and the total value of awards was the highest for any July in more ~han a decade. The agricultural outlook continued generally bvorable, with prospective production of most summer crops a OVe the 1939 and ten-year average harvests. BUSINESS The mid-summer decline that ordinarily occurs from June t1: July in the distribution of merchandise to consumers ~ rough reporting department stores in this district was much ess pronounced than usual this year. This is accounted for in jan by the larger-than-average contraction that took place in f Une. However, the seasonal reduction in consumer purchases /om May to July this year was also smaller than the average ~r that period, with the result that this bank's adjusted index ~9 department store sales rose from 105 per cent of the 19232S average in May to 108 per cent in July. Moreover, daily ~verage sales in the latter month were 5 per cent greater than In the corresponding month of 1939; this gain compares with ~n average year-to-year increase of only 3 per cent for the ~st seven months of 1940. Department store business was ~~~mul~ted during July by the promotion of extensive price d . Uctlon sales. According to reports from weekly reporting ofFartment stores, trade continued active during the first half p ,August with sales exceeding those in the corresponding e~lod of 1939 by 11 per cent. th nventories at reporting firms were again reduced by more h a~ the average seasonal amount and the value of stocks on th n at the end of July was only 4 per cent higher than on o at date last year. The rate of collections on regular accounts U tStand"lng l11crease d counter-seasona I that: Iy 'in Ju 1y an d excee ded 'W In July, 1939, by 6 per cent. sal holesale trade in the Eleventh District, as measured by sme~l at 88 reporting firms in eight lines of trade, showed a a a net expansion from June to July and exceeded that of olear ago by about 6 per cent. Among the individual lines in t ad e, noticeable increases over July last year were reflected tiy t e sales of machinery and equipment, groceries, automoele e s~pp1ies and drugs including liquors. The distribution of reg~trtcal supplies was the only reporting line of business to Yealster more than a fractional decline as compared with a iugr go . The dollar value of inventories on July 31 at reportch' fl rms Was 3 per cent higher than a month earlier due so~e :' to a sharp increase in stocks at drug firms. In comparisho lth a year ago, however, all lines of trade except one fro \\Ted a substantial increase in stocks, the gains ranging ele; ,6 per cent for grocery establishments to 34 per cent for acc~rlcal supply dealers. Total collections during July on Unts Outstanding at the beginning of the month were at h BAN K Aug. 31 a considerably lower rate than in the corresponding month last year. The number of commercial failures in the Eleventh District increased considerably in July, and liabilities of defaulting firms rose sharply to a post-depression high. Dun and Bradstreet reported 38 insolvencies during the month, having an aggregate indebtedness of $2,320,000. Although there was a noticeable increase in the number of small concerns defaulting during the month, the sharp rise in liabilities was due chiefly to the failure of one large industrial concern. AGRICULTURE Agricultural prospects in some sections of the Eleventh District were affected adversely by unfavorable weather during July. In northwest Texas, New Mexico and portions of southeastern Arizona crops suffered from a deficiency in moisture and high temperatures, and in Louisiana extensive damage to crops resulted from excessive rainfall. Despite these unfavorable factors, the outlook for agricultural production in the district as a whole is promising. With the exception of cotton, the prospective harvest of a majority of summer crops is in excess of the 1939 production, and in most cases the indicated yield is above the ten-year, 1929-1938, average production. During the first hal£ of August, heavy rains in west Texas were very beneficial to growing crops, and precipitation in portions of northwest Texas partially relieved the drouth in that area. However, severe storms accompanied by torrential rains caused further damage in Louisiana. On the basis of acreage in cultivation on July 1 and physical conditions existing at the beginning of August, the prospective production of cotton in the Eleventh District during 1940 is 3 per cent smaller than in 1939. The decline is due entirely to a much smaller indicated harvest in Louisiana where a prolonged period of wet weather damaged plants, prevented cultivation, and caused abandonment of crops in some areas. The condition of the crop in Texas on August 1, as reported by the Department of Agriculture, was above that a year earlier and the ten-year average for that date in virtually all sections except the drouth area of the Texas Panhandle. In that area, however, some relief was provided by rains during the first hal£ of August. The condition of cotton in Oklahoma, New Mexico and Arizona is fair to good, though additional moisture is needed generally. The indicated production of cotton in Texas on August 1 was placed at 2,893,000 bales, which represents a small increase over the 1939 harvest, but is nearly 1,000,000 bales smaller than the 1929-1938 average production. The estimated per acre yield of 159 pounds is about the same as that a year earlier, but 7 DEPARTMENT STORE SALES AND STOCKS EllV£NTH rEOl:RAL ROERVt D.STR.CT ~ '20 110 CfNT lUSTtD IfOR ~NN.. fvW --I~OEXc.s 1 "23_""1 ~ 00 eo ~..J~~ AI" '\ \I \ /" 'I 70 -~)J' ""'\- eo .J 130 tJV 110 '00 eo f ;~,,/" STOCKS ,\ .._,..H \J I...., to"\ I ~ '"....~",," FV 1\ \- 70 eo vI'''';' 40 30 J N"l\lv(Y. I'tr s"'"-~~lA,N V\ ctNT 120 VJIATION AIIEAAGE·.OO 'VM '00 ... ,020 I '032· I I ..,. .030 .... This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 30 MONTHLY BUSINESS REVIEW 2 per cent higher than the ten-year average. In Louisiana, the August 1 estimate of 496,000 bales indicates the smallest harvest since 1934. Only moderate increases over a year ago are forecast for cotton production in New Mexico and Arizona, but in Oklahoma the estimate of 630,000 bales is one-fifth greater than the 1939 harvest. The August 1 forecast for the United States was placed at 11,429,000 bales, which is 3 per cent smaller than the 11,817,000 bales harvested in 1939. Although the indicated production of corn, oats and tame hay in the Eleventh District was reduced moderately in July, the August 1 forecast for all feed crops is well above the 1939 and ten-year average harvests. The acreage planted to grain sorghums in Texas this year showed a further increase over that a year earlier, and the indicated production is one-fourth higher than in 1939. The prospective production of this crop in Oklahoma is likewise higher than a year ago, but a substantial decline is anticipated for New Mexico. The estimated volume of peanuts to be picked and threshed in Texas and Oklahoma is considerably higher than in 1939 and about double the 1929-1938 average harvest. The increase over a year ago is due chiefly to a higher prospective yield per acre. The Texas pecan crop has been favored with good growing conditions, and production is expected to be sharply higher than in 1939. The condition of citrus trees in Texas showed little change during July, being considerably below that of a year ago. Following the sharp decline and subsequent recovery that took place between May 1 and June 15, spot cotton prices showed a slow but steady decline during the two months ended August 15. On the latter date, the price of spot cotton, middling, 15/16-inch staple, at ten designated markets averaged 9.97 cents per pound, which compares with an average of 10.77 cents per pound at the middle of June. Although the August 15 price was approximately one-half cent per pound above the 1940 low recorded three months earlier, it was, with the exception of a brief period in May, the lowest since last November. Factors contributing to the decline in cotton prices include the temporary loss of additional foreign markets due to military operations and a recent decline in foreign textile mill activity in those countries having effective access to the American market. On August 9 the Commodity Credit Corporation announced a loan program covering the 1940 cotton crop. The loan is WHOLESALE AND RETAIL TRADE STATISTICS r - - - - Percentage ohange in: ---____"Ratio July collections ·Stocks to accounts outstandNet sales ing July 1 , July, 1040 from Jan. 1 to ~ July, 1940 from ~~-----....... July, June, July 31, 1040 July, June, InstalRetail trade: 1039 1040 from 1980 1030 1040 Regular ment Department stores: Total 11th Diet .. + 9.2 - 11.6 5.1 14.5 2.9 4.2 40 .9 Dallas .... . ..... +10.7 - 3.0 16.6 3.0 40 .5 3.6 - 5.0 Fort Worth .... . . + 5.6 -21.5 2.0 +10.2 - 6.1 40.0 11.3 Houston . ........ + 7.7 - 14 .6 42 .5 + 1.5 2.1 - 18.6 San Antonio ..... +10.1 - 5.3 44 . 1 7.5 i2:4 6.1 + 5.7 Other oities ...... + 1.2 -20.5 + 0.0 +1.7 - 5.3 37 .5 16 .0 Indespendent stores:t Arizona ......... + 6.3 ..... . 5. 7 Oklahoma ....... + 3.3 - 4.9 + 1.9 New Mexico ... .. + .9 5.6 Texas . .......... + 5.0 - 4.1 3.8 Wholesale trade:t Machinery, eqp't & supplies (except +23.6 ...... 42.3 eleotrical) ....... +10.5 - 23 .3 Groceries ......... +10.0 +.6 + 5.6 + 5.8 - . 6 80.2 + 7.5 +20.3 +14.1 75.3 Drugs .. .. ...... .. + 7.4 +14.6 0.0 + 3.3 +11.7 + 3.2 54.2 Hardware ........ - . 4 Eleotrical supplies. - 7.7 - 3.2 + 1.8 +33.6 - . 9 74.8 Tobacoo & prod's . . 0.0 - 6.9 -.9 86.5 Surgical eqp't ..... + 5.6 + 7. 1 +i5:il +'5:7 43.8 0.0 - 4.1 62.9 Automotive sup!'s. + 7.8 +12.8 ·Stooks at olose of month. tCompiled by United States Bureau of the Census. INDEXES OF DEPARTMENT STORE SALES AND STOCKS (1923-25 averago= 100) With seasonal adjustment Without seasonal adjustment + + + + + + + + + + + Total Eleventh Dist .. Dallas .. ............ Fort Wortb .. ........ Houston ............ San Antonio ......... Sales-July 1940 1939 108.0 102.6 118.2 110.9 112.4 109.9 102.7 102 .6 114. 4 99 .4 Stocks-July 1940 1939 65.9 63.2 64.4 62.5 60.9 67.8 42.5 42.2 00.8 64.1 Sales-July 1940 1939 75.6 71.8 79 .2 74.3 84.3 82.4 71.8 71.0 77.8 67.6 Stooks-July 1940 1939 60.0 57 .5 50.9 58.1 56.0 62.4 37.8 37 . 6 55 .8 52.9 based on 15/16-inch, middling cotton, with differentials for grade, staple and location varying from 9.90 cents per pound in the eastern part of the cotton belt to 9.16 cents per pound in west Texas and New Mexico. Loans will be available until May 1, 1941, to producers cooperating with the program of the Agricultural Adjustment Administration. The basic loan rate on the 1940 crop is 21 points higher than the rate on the 1939 crop. Livestock ranges in the Eleventh District deteriorated seasonally in July, but in most sections conditions remained above the ten-year, 1930-1939, average. On August 1 ranges in the western portion of the district showed the adverse effects of the hot, dry weather, and in northwest Texas conditions were becoming serious due to the lack of moisture. The unfavorable situation in these areas was partially relieved by rains during the first half of August, but additional precipitation is needed, particularly in the Texas Panhandle. The condition of livestock continued generally good throughout the district, although stockmen in some of the drier cattle areas resorted to supplemental feeding in order to prevent shrinkage. According to the Department of Agriculture, shipments of cattle and calves were fairly light in July, and marketings this fall are expected to be relatively small. ~n the other hand, shipments of sheep and lambs picked up In July, with heavy marketings in prospect during the next few months. During the first half of 1940, the movement of cattle and calves from Texas to market and to feed lots was 19 per cent smaller than in the corresponding period of 1939; whereas, shipments of sheep and lambs exceeded those of a year ago by 111,000 head, or by 9 per cent. A larger number of breeding ewes on ranges, together with generally favorable feed and weather conditions during the past winter and spring, resulted in a record high production of lambs in Texas this year. The Department of Agricultu~e estimated the 1940 lamb crop at 4,867,000 head, which IS one-fifth higher than in 1939 and 6 per cent above the previous record number produced in 1938. The 1940 production of lambs in New Mexico is moderately higher than in 1939, and the Arizona crop is about the same as that a year earlier. Reflecting chiefly the higher production of lambs in TexaS, the number docked in the United States increased 3 per cent in 1940 to an all-time peak of 32,729,000 head. Coincident with the expansion in the number of sheep on ranges, the quantity of wool shorn or to be shorn in Texas during 1940 increased to an all-time peak of 83,648,000 CROP PRODUOTION (In thousands of units) , . - - - Texas - - " . - Eleventh District---Estimated Estimated Crop Unit Aug. 1,1940 1939 Aug. 1, 1940 1989 Cotton .. ...... . ..... . .. . Bales 2,893 2,846 3,516 3,631 Corn..... .. ... . .. ....... Bushels 91,630 73,876 105,530 87,166 Wheat. . . . . . . . . . . . . . . . . . Bushels 26,270 27,650 26,999 28,703 Oats . .. .. . ... .. .. . .. ... . Bushels 34,375 28,750 37,631 31,3~~, Barley. . . . . . . . . . . . . . . . . . Bushels 3,632 2,055 10,540· 10,2 , 90 Grain sorghums.. .. .. .. .. Bushels 48,075 38,115 65,478* 5~'J30 Tamo hay. . . . .. . ... . . .. . Tons 1,189 1,022 1,606 3'349 Irish potatoes... ... .. . . . . Bushels 3,102 2,666 8,814 ' oot Sweet potatoes........... Bushels 4,158 3,780 l1,703f J1'~88t Rico ....... . ........ .... Bushels 15,714 13,988 15,714 13, 01 Peanuts. . .. . ... .. .. . .. . . Pounds 159,000 120,480 108,875 151,t~4 Pecans.................. Pounds 31,400 19,000 52,814 3~'1201 Peaches............ . Bushcls 1,976 1,972 2,9891 ' s ·Oklahoma, Texas, New Mexieo and Arizona. tLouisiana, Oklahoma and Tcxas. Ifl'e:ttl only. ILouisiana, OklahomubTexas, New Mexico and Arizona. Other data for E eve District derived from estimates y states. SOURCE: United States Departmcnt of Agriculture. OASH FARM INCOME FROM THE SALE OF PRINCIPAL FARM PRODUCTS AND GOVERNMENT BENEFIT PAYMENTS (In thousands of dcllars) r - - - May, 1940-----.., Receipts from: Govern- ,~---....:Total receipts~M 31 ~--------." ment May May Jan. 1 to al~39 Crops Livestook· payments 1940 1939 1940 23 166 Arizona ...... . 1,008 2,240 55 3,303 2,742 24,161 88'050 Louisiana ..... . 5,239 1,887 2,135 9,261 9,836 39,792 11' 433 New Mexico .. . 239 2,415 138 2,792 2,552 15,393 59'891 Oklahoma .... . 2,861 6,9aO 1,437 11,228 14,977 62,408 '515 Texas ........ . 11,024 26,200 2,545 80,760 45,232 175,733 ~ 317,487 299,015 Total. . . 20,371 39,672 6,310 66,353 75,330 ·Includes receipts from the sale of livestock and livestock products. SOUROE: UnItod States Department of Agriculture. MONTm..y BUSINESS REVIEW P~unds . This quantity is 8 per cent above the 1939 clip and a. OUt one-third higher than the 1929-1938 average production. The amount of wool shorn in New Mexico is estimated ~o ~e 4 per cent higher than a year ago, while a fractional Uc!me is indicated for Arizona. Wool production in the hOi ted States is placed at 388,692,000 pounds, which exceeds t e previous record output in 1939 by 3 per cent. FINANCE On July 11 the United States Treasury invited cash sub. Iscr'IPtlOns to an issue of 2 Y4 per cent Treasury bonds, and er in the month the Commodity Credit Corporation asked 30r subscriptions to a new series of Government guaranteed, per cent, Corporation notes. Subscriptions to these securi~t in the Eleventh District aggregated $143,400,000 for !,easury bonds and $51,421,000 for the Corporation notes; ~4 Otments against these subscriptions totaled $14,506,000 and f ,698,000, respectively. Changes in the investment position ~ banks in this district during the five weeks ended August ~ reflect in a large measure the effects of the distribution of t ese securities. I I~vestment holdings at weekly reporting member banks in leading cities, which had followed a downward trend since as~ December, were expanded $11,900,000 between July 10 ~? August 14, representing increases of $10,400,000 in Irect and guaranteed obligations of the United States Govetrnment and $1,500,000 in other securities. On August 14 Otal mvestments . 20 at reporting banks amounted to $259,I 0,000, which was $1,600,000 higher than a year ago. All ~ a~ses of loans at these banks except "other" loans, which ~n~ ude personal advances, increased during the five weeks dn ed August 14, but total loans of $268,400,000 on that ! ate Were only $1,700,000 higher than five weeks earlier, with oans for commercial, industrial and agricultural purposes aCCOu' . ",' h ntmg f or $1,100,000 of the increase. In companson Alt a year ago, total loans outstanding at the middle of Ugust were $19,200,000 greater. Government deposits at reporting banks showed a net in~~~ase of $4,606,000 between July 10 and August 14, and ",Jus ted demand deposits rose $4,595,000, but these increases t' ere more than counterbalanced by declines in interbank and ~rne deposits. In consequence, total deposits on August 14 e ere $2,200,000 lower than five weeks earlier and only moddra~7ly ~bove the 1940 low point. In order to meet the net thC me m deposits and the increase in loans and investments, t .ese banks withdrew $15,800,000 of their balances mainalDe~ at other domestic commercial banks. F d ady average reserves of all member banks carried with the be era I Reserve Bank of Dallas were reduced $4,900,000 i:t,,:,een the middle of July and the middle of August, reflectt g In part the Icash purchases of investment securities. Simule~neous with this reducti~n, required reserves of member banks suh~nded in consequence of an increase in net demand deposits a\, Ject to reserve. As a result of these developments daily of ~age excess reserves maintained at the Federal Reserve Bank end alIas declined approximately $7,000,000 during the month in e~ ~ugust 15. This decline was relatively small, however, ha re atlon to total excess reserves, which were estimated to A;e averaged about $83,000,000 during the first half of of ~USt. Member bank borrowing at the F~deral Reserve Bank 000 alIas between July 15 and August 15 Increased by $526,ba k to a total of $862,000. While discounts for member s are still in nominal volume, the total at the middle of not&USt Was the highest since September, 1937. Federal Reserve du ~s of this bank in actual circulation increased further oo~ln& the month ended August 15, and the total of $82,400,Yea OUtstanding on that date was $5,100,000 greater than a r ago. t o 11.: Fl' INDUSTRY o lowmg a sharp increase in June, occasioned by the award- 8 ing of contracts for a large naval air base, the value of construction contracts awarded in this district showed a marked decline in July. The decrease from June to July, amounting to nearly 50 per cent, reflected a smaller volume of awards in all classes of construction work. However, when the value of awards for the naval air base is excluded from the June total, awards in July were approximately one-fourth higher than in the preceding month. Furthermore, the value of contracts let in July was nearly 30 per cent larger than in that month of 1939 and above that for any corresponding month since 1929. Residential building, which declined 20 per cent, was the only type of construction work that failed to register an increase over that in July last year. This unfavorable comparison is due to the fact that total residential building in July last year was augmented by heavy awards for publiclyfinanced projects, including United States Housing Authority slum-clearance projects and army barracks. Privately-financed residential awards this July were about 8 per cent higher CONDITION OF THE FEDERAL RESERVE BANK (In thousands of dollars) Aug. 15, Aug. 15, 1040 1030 July 15, 1040 Total oash reserves . . . . . . .. . . . . .. . •••.. . . . . ••... .. $270,705 $243,564 $251,549 Discounts for member banks ... . . . . . . . .. . . .• •. . . .. . 862 375 336 Oth ~r bills disoounted. .. . .. . . .. .. .. . .. . . ... .. . . .. . None 59 Nono Industrial advances . .. . . . . . . . . . . . . . . . . . . . ..... . . . . 463 552 465 Bills bought in the open market. . ... . .. . . ..•...... . None 16 None United States Government securities... . . . . . . . . .. . . . 05,344 03,201 05,465 Total earning assets. . . . . . . . . . . . . . . . . . . .. . . . ... . . . 06,660 04,203 06,266 Member bank reserve deposits. . . . . . . . . . . . . . . .. . . 211,054 105,803 210,829 Federal Reserve notes ia aetual eirculation . . . . .. . . . . 82,400 77,273 81,631 CONDITION STATISTICS OF MEMBER BANKS IN LEADING CITIES (In thousands of dollars) Aug. 14, Aug. 16, July 10, 1040 Total loans and investments. . . . .. .. .. . . . . . . . . . . .. . $527,626 Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,404 Commereial, industrial and agrieulturalloans. . . .. . 176,000 Open market paper. .... .. . .. .. . ......... .. .. . . . 2,302 Loans to brokers and dealers in seeurities. . .. . . . . . . 2,853 Other loans for purehasing or oarrying seourities . ... 13,472 Re. 1 .9t. t. loan.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,004 Loans to banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 000 All otherloan. . . . ... .. .. . .. . ... . . . . . . . . . ...... . 40,774 United States Government direot obligations. . . . . . . . . 153,104 Obligations fully guaranteed by United States Govt. . 48,166 Other seourities . . . . . . . . . . . . . .. . . . . .. . . . . . . . . .. . . . 57,862 Reserves witb Fodoral Roserve Bank. .. . . . . .. .. . . . . . 140,000 Balances with domestio banks. .. . . .. . . .. . . •.... .. . . 284,714 Demand deposits-'adjusted . .. . ... . . .. . ......... 490,145 Time dcjlOslts... . . . .... . . . .. . . ......... . .... .. . . 135,500 United States Govornmont doposits.. . .. . .. .. . . . . .. 31,708 Interbank deposits. . ... . . . . . . . . . . . . . . . . . . . . . . . . .. . 245,630 Borrowings from Federal Reserve Bank. . . . .. ... . ... None 'Includes all demand doposits other than interbank and United oash items reported as on hand or in prooeBB of oolleotion. DEBITS TO INDIVIDUAL ACCOUNTS (In thousands of dollars) July July Potg.ohango 1040 1039 over year Abilone. . . .... . ..... . . . . $ 7,818 $ 7,845 .3 Austin ........ .. . •. ..... 31,000 32,700 - 2.5 Beaumont... ..... . . . ... . 23,300 22,253 + 4.7 Corsioana . . . . . . .. . . . . . . . 2,810 2,841 - 1.1 Dallas..... . .. . . . ... .. .. 244,214 238,816 + 2. 3 EI Paso.. . ...... .. . ..... 20,720 25,648 + 4.2 Fort Worth ..... . .. . ..... 80,347 83,800 - 4. 1 Galveston .. .. .... .. ... . . 24,048 21,864 +14.1 Houston... ..... . .. . .... . 247,614 214,484 +15.4 Port Arthur ... . .•.. .. ... 9,242 8,005 + 6.3 Roswell. . . . . . . . . • . . . . . . . 4,680 4,283 + 0.5 San Antonio . . .. ... . . . . .. 71,064 67,700 + 0.3 Shrovoport . . . . . .• . ...... 45,032 40,911 + 10.1 Texarkana' . . . . . . . . . . . . . . 0,017 6,624 .1 Tueson.. ..... ... .... .... 11,202 0,588 +17.8 Tyler .,.. ...... ... .. ... . 10,022 10,001 + .2 Waoo .... . .. . . . ......... 12,630 12,680 .3 Wiohita Falls...... . ... . . 16,061 14,303 +11 . 6 1030 $506,851 240,228 103,157 1,641 3,354 13,785 21,101 438 45,662 158,017 45,1 23 54 ,483 123,871 200,080 455,235 135,382 31,600 21 8,068 1040 $514,074 266,750 174,899 2,035 2,372 12,806 22,211 626 51,711 145,828 45,176 56,320 140,000 300,480 485,550 136,710 27,102 Juno Potg. ohango over month 25~J007 None None States Governmont, less 1940 $ 7,010 34,618 22,833 2,843 238,522 26,847 80,207 25,585 226,411 0,484 4,502 73,820 42,480 6,082 12,309 11,093 12,436 16,585 + 2. 7 - 7.0 + 2.0 + 1. 2 + 2.4 -.5 +.1 - 2.6 - 0.4 + 2.0 + 4. 2 - 2.5 + 6.0 - 5.2 - 8. 0 - 1.5 + 1.6 - 3.2 Total. . . . ..... .. $878,129 $820,041 + 6.3 $855,356 + 2,7 ' Inoludes tho figures of two banks in Toxarkana, Arksnsas, loeated ia the Eighth Distriot. SAVINGS DEPOSITS July 3J, 1049 Percentage ehange in --.. savings doposits from Number of Number of Amount of r July 31, savings Juno 30, savin~s reg;:rtin g depositors anks depOSIts 1030 1940 0,677 $ 4,015,600 + 4.3 .2 3 Beaumont . . . . .. ........ . 00,284 26,454,502 1.0 .0 8 Dallas .. . . . .... . .. ... ... 2 .4 18,330 8,207,440 .2 EI Paso .. ..... .... . .. ... 35,468 13,022,089 5 .0 3 .8 Fort Worth . . . ... ... .. . .. 4 10,070 12,203,402 +1.4 + .03 Galveston .. . , .. . .. ..• . . . 10 31,558,357 + 3.8 .9 77,268 Houston . . . . . . . . .. . ... .. . 2 5,935 3,197,741 + 8.0 Port Arthur . . . ... . .. .... + 1.7 - 1.1 5 22,716 17,780,078 - 2.9 San Antonio .... . . . •. . . . . 3 25,188 .0 12,304,056 + 4.5 Shroveport .. . .. .. ....... - 1.5 4,622,040 - 1.0 3 8,267 Waoo . ..... . .... . . ... ... 7,226 3,645,016 - 6.5 - 3. 2 3 Wiohita Falls . .... . •..... 60 61,201 30,714,660 + 2.5 - .8 All others . . .. . . ... ... . .. Total. .. . ...... . 115 380,720 $167,007,708 + .6 - .8 , MONTHLY BUSINESS REVIEW than in that month of 1939. The value of non-residential building initiated during the month was about double that in July, 1939, and represented principally an increase in private construction. The value of contracts awarded for heavy engineering projects showed an increase of 85 per cent as compared with a year ago due chiefly to an expansion In publicly-financed work. Extension of the emergency proration order instituted in Texas during the latter part of June to effect a better alignment between production of and demand for crude oil, resulted in a further sharp contraction in petroleum output in the Eleventh District during July. The curtailment in this district was also responsible for a decline of 3 per cent in daily average production for the United States as a whole. In comparison with July, 1939, daily average petroleum output in the Eleventh District was 11 per cent smaller but elsewhere in the United States production was at a rate averaging 13 per cent higher than a year ago and the total for the nation averaged 2 per cent above that in July last year. In consequence of the curtailment in output, stocks of crude oil in this district declined moderately during July, but in the United States inventories witnessed a further small gain. Following an uninterrupted increase during the first six months of the current year, daily average crude oil runs to refinery stills in the United States declined considerably in July but continued at a 3 per cent higher level than a year ago. In the Eleventh District, refinery operations were maintained at the June rate, but were 3 per cent smaller than in the corresponding month last year. Production of gasoline in the United States declined further in July and as consumption was maintained at a high level inventories of motor fuel declined considerably, but on August 3 stocks were still 17 per cent higher than a year ago. Inventories of heating oil increased seasonally and are drawing nearer to a level adequate to meet the heavy seasonal demand during the winter months. Stocks of fuel oil also increased further during July. VALUE OF CONSTRUC'l'ION CONTRACTS AWARDED (In thousands of dollars) July July' June January 1 to July 31 1940 1939 1940 1940 1939 138,367 111,825 Eleventh Distrie~total... 19,011 14,697 37,963t 6,516 8,179 10,728t 47.727 48,820 ResidentiaL. .. ........ All other. . . . . . . . . . . . . . 12,495 6,518 27,235 90,640 63,005 United States"-totnl. . . . . 308,673 290,883 324,726 2,021,760 1,999,247 Residential. . . . . .. .. . . . 140,430 109,330 135,274 831,002 753,857 All othor. . . . . . . . . . . . . . 258,243 100,553 189,452 1,190,758 1,245,390 "37 states east of the Roeky Meuntains. t Revised. SOURCE: F. W. Dodge Corporation. BUILDING PERMITS Percentage ehange Pereentage valuation from J an. I to July 31, 1040 ohan$e July,1040 r 'V V' ValUo.tlon No. Valuation July,1930 Junc,1040 No. Valuation from 1030 31 $ 52,885 + 54.7 - 5.7 107 $ 343,445 - 7.3 Abilone ....... . 78 177,760 + 87.2 - 3.0 538 1,526,475 - 7.6 Amarillo ...... . 478,889 - 25.2 + 7.0 2,043 4,820,272 - 6.4 Austin ........ . 268 103,174 + 29.0 + 20.7 861 051,010 + 8.9 Beaumont ..... . 138 782,662 +253. a +214.4 1,386 4,873,382 +58.2 Corpus Christi . . 208 8,332,167 + 2.7 Dallas· .. . .... . 636 1,207,536 + 64.5 - 12 .2 4,270 02 227,505 + 90 .5 + 60 .0 630 1,488,089 +30.6 EI Paso ....... . 436,610 4.0 + 30 .9 1,730 2,903,759 -22 .6 Fort Worth .... . 264 124,728 + 3.5 - 30.7 1,020 1,235,061 +34.1 Galveston .. .. . . 150 3,454 13,612,625 -14.3 Houston ..... . . . 489 2,076,220 + 55.5 + 74 .5 79,808 4.0 - 19 .5 024 700,603 +14.1 Port Arthur ... . 145 826,210 +132 .3 + 87.3 4,778 3,066,120 +38.1 San Antonio ... . 679 603,020 +145.0 +124.4 1,310 2,970,700 - 10.5 Sbreveport .... . 158 76 669,040 +416.5 +441.0 400 1,378,788 +27.3 Waco ......... . 46 94,758 + 40.4 - 21.6 321 702,950 +29.9 Wichita Falls .. . ------ Total .... 3,458 $8,121,804 + 07.7 + 40.3 "Includes ffighland Park and University Park. 23,070 $40,805,455 + .9 CRUDE OIL PRODUCTION-(Barrels) July, 1940 Increase or decrease in daily ~--------." average produotion from Total Dailyavg. , r - - - - - -- __." produotion produotion July. 19a9 June. 1940 4,609,850 150,640 - 5,484 - 17,370 North Texas ... . .. .. ..... .. .. 6,730,150 217,102 - 56,779 - 44,478 Weat Texas ........... . .... . . 462,839 - 17,469 + 13,623 East Texas ......... .. ... . .. . 14,348,000 5,606,900 180,868 - 47,340 - 47,934 South Texas ........... ..... . 5,814,000 187,548 40,262 38,577 Texas Coastal. .............. . Total Texas ..... . .. . New Mexico . ... ............ . North Louisiana ............. . 37,168,900 3,252,000 2,040,600 1,198,997 104,903 65,826 -167,334 - 3,845 - 4,697 Total District.. . ... . . 42,461,500 1,360,726 -175,876 SOURCE: Estimated from American Petroleum Institute weekly reports. - 134,736 1,099 - 3,051 -138,886 Although domestic consumption of petroleum productS continues heavy, exports of crude petroleum and refiner}' products have declined sharply due chiefly to restrictions on exports to combat zones. On July 23 the United States Go~ ernment added petroleum and petroleum products to the lIst of commodities subject to the Export-Control Act, under which exports of materials essential to national defense may be restricted or prohibited. Drilling activity in the Eleventh District and in the Unit~d States declined in July. Although the rate of completions In this district was below that of a year ago, in the nation as a whole it was 7 per cent greater than in July last year. Operations at cottonseed oil mills in the United States showed a further moderate decline during the 1939-1940 season, due largely to a smaller supply of seed. Production of cottonseed products reflected declines ranging from 4 per cent for linters to 9 per cent for hulls. Shipments of cottonseed oil from mills during the past season were approximatel~ the same as those in the preceding season, but shipments 0 cake and meal and hulls declined about 9 per cent. Sales of lin ters were subs tan tiall y higher than in the 193 8-19 39 season, reflecting in part a sharp .increase in exports. Shipments of crude and refined cottonseed oil to foreign countries were also much greater than in the previous season. Mill stocks of cottonseed products were reduced sharply during the past season and in the case of cake and meal and hull supplies on hand at the end of the season were at a level considerably below the ten-year, 1929-1938, average. Inventories of cottonseed at crushing establishments on July 31 were the smallest for that date in four years. Operations at Portland cement mills in Texas during the first half of 1940 were somewhat smaller than in that period o~ 1939. Nevertheless, operations during the period were at a h~gh level; production and shipments were, with the exceptIOn of 1939, greater than in any corresponding six-month period of record. Activity at southern pine mills during the ~rst six months of 1940 also averaged somewhat below that III the comparable period of 1939. In recent weeks, howeyer, the demand for lumber has shown a substantial increase oyer that of a year ago and shipments have increased accordinglYi The volume of unfilled orders for lumber on the books .od southern pine mills at the end of July was nearly one-thlr larger than a year ago. STATISTICS ON COTTONSEED AND COTTONSEED PRODUCTS ~---Texas---v---Unitcd States----August 1 to July 31 August 1 to July 31 on This season Last season This season Last scnS Cottonseed received at mills (tons) .................... . 921.552 1,068,821 4,066,507 4,25~,~~~ Cottonseed crushed (tons) .... . 960,090 1,194,826 4,148,237 4,47 , Cottonseed on hand July 31 120,626 (tons) ..... .... ... . ....... . 16,530 55,068 38,896 Production of products: Crude oil (pounds) ...... .. . 281,231,027 354,127,418 1,324,737,240 1,409,4~~,~r Cake and meal (tOllS) ...... . 462,930 2,0.. , 79 566,235 1,880,438 1,161,° Hulls (tons) .. ............ . 247,742 317,605 1,054,748 1,113,812 Linters (running bales) ..... . 224,857 265,327 1,073,502 Stocks on hand July 31: Crude oil (pounds) . ... . . .. . 53,358,6f~ 6,226,974 8,923,230 13,248,158 110,7 Cake and meal (tons) .. . ... . 20,548 25,065 81,858 77,087 Hulls (tons) .. ............ . 6,195 29,280 22,177 479,8 16 Linters (running bales) ..... . 43,638 127,329 133,364 SOURCE: Bureau of Census. PORTLAND CEMENT STATISTICS-TEXAS MILLS (In thousands of barrels) tb) Production Shipments Stocks (ead~ 1940 1989 1940 1939 1039 m 571 m 533 ~ 545 1940 W 477 Juno ................... . 589 713 758 672 499 720 772 587 678 699 712 594 697 665 686 644 761 775 820 898 862 065 709 796 688 Total, six months.. . 3,654 3,772 8,666 3,805 January .. . ..... .... .. .. . Fcbruary ............... . March .. ... ..... ... . .. .. . tr:~I:.... ::::::::::::::: : ~ 850 - - RECEIPTS, EXPORTS, AND STOCKS OF COTTON AT THE PORTS OF HOUSTON AND GALVESTON-(Bales) August 1 to July 3~p July July June This season Last scn 1940 1939 1040 2122, 144 23 435 3,9, 2'205 170 3,605,229 ' . ' •.. Stoeks, end of month. . . .. 1,235,465 1,002,366 1,284,743 ~~~rt!."::::::::::::::::: ~:~~b ~g~~ ~~:~~: MONTHLY BUSINESS REVIEW SEPTEMBER 1,1940 NATIONAL SUMMARY OF BUSINESS CONDITIONS (Complied by the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION .NT "'" 140 130 I / 100 80 70 I~ / 0 rrvf 110 ) \ IV 90 120 I V \ \ 110 I 00 v 90 80 70 eo 60 1934 193~ 1936 1937 1938 1939 1940 Index of physical volume of production, adjusted for seasonal variation, 19 35-1939 aver ag e 100. By months, January, 1934 to July, 1940. = • ~ONS CONSTRUCTION CONTRACTS AWARDED OF DOLLARS DOU:~~ MILLI ONS Of r---~----~--~----~--~----~--~400 o 193!5 '936 1937 1938 1939 1940 Three·month moving averages of F. W. Dodge CorPOration data for value of contracts awarded in 37 Eastern States, adjusted for seasonal vari ation. Latest ligures based on data for June and July and estimate for August. WHOLESALE PRICES m- "'" C%HT 110 100 100 90 90 eo eo 70 70 eo 60 80 80 \934 1936 1936 1937 1938 1939 1940 Indexes compiled by the United States Bureau of labor Statistics, 1926 100. By weeks, 1934 to week ending August 10, 1940. = ~f!-i~E::ER BANK RESERVES AND RaATEO ITEMS L 18_ ~ I ·r---i---_+----~--1_--_+~~ ~t_~ 1 14 , -+--+--+- -1- -7"1''/- -1- ....J'~ 14 12 1-----r----+---OO-L~D~~700~~ ~I~~ ----r_~~~.r~--~1 1°r--+-/ ----:,.r-e!!-:::.....+ --- --' ~f~~"Ia~V--pL.J-f--I IO J:::.OI~g.,czTI~N .- .Vv-'" ' ITr . .---"1--' r~~{1 --l-_- - l - - - l 4 -:::~::'?""!..6. iIfAN"'K,....t:.:!.:NJ. . :.:•,....:.b~n.'~ . ~.S ~""".J'. l-!......"'-J"--... ---''''''''....... :::::o!....J 1934 1935 1936 t937 1938 1939 0 1940 \'Vednesday figures, January 3, 1934, to August 7, 1940. Volume of industrial output was steady during July ~nd the first half of August, after a r~pid expansion in May and June. Employment continued to increase. Reflecting mainly awards for national defense projects, construction contracts rose to the highest level in ten years. Prices of basic commodities declined somewhat further. PRODUCTION In July the Board's revised index of industrial production stood at 121 per cent of the 1935-39 average, according to preliminary data. This is the same as in June and 17 points above the level prevailing a year ago before the outbreak of the war. In most lines activity was maintained at the levels reached in June or increased further. Steel production in July was at about 85 per cent of capacity and in the first half of August there was an increase to about 90 per cent. Production of pig iron and coke and output of nonferrous metals were also in large volume. In the machinery, shipbuilding, and aircraft industries, where new orders had been large during the first half of the year and a considerable backlog of unfilled orders had accumulated, activity was maintained at high levels in July, although ordinarily there are declines at this seaSOn. Lumber production declined sharply early in July but has subsequently increased accompanying a considerable rise in new orders. In the automobile industry output declined sharply in July and the first half of August as plants were closed to prepare for the shift to new model production. The decline was greater than at this season in other recent years, reflecting the fact that production had been at high levels during the first half of 1940 and large stocks had accumulated. These stocks were reduced considerably in July as production was curtailed and retail sales continued large. Textile production increased considerably further in July, reflecting chiefly a marked rise in activity at woolen mills where output is still below the levels of a year ago. Production of cotton nnd rayon textiles was maintained in July and was in larger volume than last summer, while activity at silk mills increased somewhat from the exceptionally low level reached in June. Shoe production increased seasonally, while output of manufactured foods, which in June had been unusually large for that time of year, showed less than the customary increase in July. Coal production has risen further and shipments of iron ore down the Lakes have continued at near-capacity rates. Petroleum production has been curtailed sharply, however, reflecting partly a continued high level of stocks of petroleum products. Value of new construction work undertaken increased sharply in July, owing mainly to a further rise in public construction, and was at the highest level in the past decade, according to reports of the F. W. Dodge Corporation and the Federal Reserve Bank of San Francisco. Awards for both residential and nonresidential private building increased somewhat, although some decline is usual at this season. Increases were most pronounced in the Atlantic, Gulf, and Pacific Coast States, reflecting awards of additional contracts for naval air station and shipyard construction. In the central portions of the country there were generally small increases, although in some areas awards were lower. DISTRIBUTION Distribution of commodities to consumers was sustained in July at about the levels prevailing in the first half of the year. Sales at .department stores declined more than seasonally, while sales at variety stores showed little change, although a decline is usual in July. Total freight-car loadings increased seasonally in July. Shipments of grain showed a considerable rise and loadings of coal and coke continued to advance, while shipments of miscellaneous freight, which include most manufactured products, declined by somewhat more than the usual seasonal amount. COMMODITY PRICES Prices of basic commodities declined somewhat further from the middle of July to the middle of August, with decreases chiefly in prices of commodities influenced by foreign supplies, such as lead, rubber, cocoa, and coffee. Prices of steel scrap and zinc, on the other hand, advanced somewhat in this period. AGRICULTURE Prospects for most crops showed little change in July, according to the Department of Agriculture. Production this year is expected to approximate the 1929-38 average and, considering carryovers, supplies of most crops will be large. Conditions for wheat and oats improved during July, while the corn crop showed some deterioration. A cotton crop of 11,429,000 bales was indicated for this season as compared with 11,817,000 bales last season. BANK CREDIT Total loans and investments at reporting member banks in 101 leading cities increased substantially during the five weeks ending August 14, owing mainly to purchases of direct and guaranteed securities newly issued by the United States Government. Sale of these securities caused a large increase in Treasury balances with the Federal Reserve banks. As a result of this temporary development, excess reserves declined by $450,000,000 in this period despite an increase of over $500,000,000 in monetary gold stock . GOVERNMENT SECURITY MARKET Prices of United States Government securities were relatively steady during July and the early part of August but declined slightly around the middle of August accompanying news of intensification of European warfare. The yield on the 1960-65 bonds increased to 2.39 per cent on August 14 compared with 2.34 per cent on July 1 and 2.26 per cent on April 2 at the year's peak in prices. UNITED STATES CONSUMPTION AND EXPORTS OF COTTON, 1939-1940 SEASON The outbreak of war in Europe last September had a pronounced effect upon the world's cotton trade. Some foreign nations found it expedient to replenish depleted stocks of cotton, particularly American, and activity at cotton textile mills in most countries showed a noticeable upturn. In belligerent countries, processing establishments accelerated operations in order to meet the enlarged Government requirements of cotton goods for military purposes. In other countries, heavier internal demand from the civilian population and from governments for defense purposes, together with increased foreign buying of cotton goods, resulted in increased mill activity. In the United States, the outbreak of the war brought heavy buying of cotton goods with the result that cotton mill operations were stepped up sharply, and continued at a high level during the remainder of the year. On a seasonally adjusted basis, the amount processed rose to an alltime peak in December, 1939, and the actual volume of cotton consumed during the first five months of the season was at a record high for that period. Although the rate of consumption declined considerably in the first quarter of 1940, it turned upward again following the intensification of the European War. The expansion in activity in this country last fall was accompanied by higher prices for cotton goods, wider mill margins, and the accumulation of a heavy backlog of orders for future delivery. Since the initial buying movement last September, the demand for cotton textiles has been sporadic, increasing sharply at times and then declining to a low level. Nevertheless, the heavy backlog of orders accumulated during the fall of 1939 and the intermittent buying in subsequent months enabled mills to maintain operations for the season as a whole at a high level. The volume of raw cotton consumed in the United States during the twelve months ended July 31 amounted to 7,746,000 bales. This total exceeds the amount processed in the preceding season by 887,000 bales, and is only moderately smaller than the record consumption of 7,950,000 bales during the 1936-1937 season. Consumption of cotton in Texas during the past season showed a percentage increase over that in the preceding season commensurate with the gain for the United States as a whole. Moreover, the volume consumed in this State exceeded the total for the 1936-1937 season by 6 per cent. The operating results of consuming establishments in the United States during the past season appear to have been more profitable than in either of the two preceding seasons. The average margin between the price of a pound of raw cotton and the price of its cloth equivalent increased sharply last fall, and although a downward trend has been in evidence since that time, the spread for the season averaged 21 per cent higher than in the previous season and 4 per cent in excess of the average for the 1937-1938 season. Exports of American cotton amounted to 6,175,000 bales during the twelve months ended July 31, which was nearly double the small volume shipped in the preceding season and the highest for any corresponding period in six years. Direct shipments to Germany ceased shortly after the outbreak of the war, but exports to all other major importers of American cotton increased during the 1939-1940 season. From the standpoint of volume, exports of cotton to the United KingCONSUMPTION. STOCKS AND EXPORTS OF COTTON-(Bales) July July June August 1 to July 31 1940 1939 1940 This season Last season Consumption at: 12,497 9.182 10,759 139,315 122,460 Texas mills . .... .... . . . 597,860 521.353 556.529 7.745,574 0.858,428 United States mills .. .. . U.S. stooks-end of month: 862,105 973,542 1,160,028 In consuming estab'mts . 9.572,142 Public stg. &I compresses . 9,122,178 11,620,408 EXjlorts from U. S. to : 42,125 7,815 26,055 1,889.141 401,370 United Kingdom .. ... . . 2,892 None 11,874 724,025 338,023 Franoe ... . ...... , .... . 14,913 6,540 None 542.400 275,943 Italy .... ......... .. .. . 18,992 Nono 14.699 None 321,335 Germany .. . . . .... . . . . . 24,174 4,264 1,052,705 721,320 8,947 Other Europe . .. ...... . 18,755 34,503 42,143 914,154 864,278 23,283 50,294 1,033,932 404,571 i'lr~~I;~r ~~;i~t~ie". '.:::: 27,173 Toto! exports . . .. 120,388 106,531 133,530 0,175,349 3,326,840 dom showed the most pronounced gain, increasing to the highest level in thirteen years and accounting for nearly onethird of total American exports. Movements to Continental Europe have virtually ceased since the extension of the war to the Mediterranean area and the surrender of France. Nevertheless, shipments to Continental European countries for the entire season exceeded those in the preceeding season by a wide margin. During the past season, Spain reentered the American market as a substantial buyer of cotton. Movements to the Far East showed a considerable increase over those a year earlier due chiefly to a marked expansion in takings by China. The heavy exports of cotton from the United States resulted principally from the depleted foreign stocks of American cotton Qt the beginning of the war, and during subsequent months from the rushing of shipments for current needs and for the accumulation of large stocks as a precaution against further shipping difficulties. The American export subsidy, which improved the competitive position of American cotton in world markets; easier access to our markets; and the sharp increases in cotton mill activity in Great Britain, France and several other European countries were also important factors contributing to the increase in exports. Although total shipments during the past season were much larger than in the preceding season and the heaviest for any season in six years, they were still about 2,000,000 bales smaller than the average during the ten years prior to the 1934-1935 season. The contraction in exports during recent years reflects the decline in foreign utilization of American cotton as a result of the expansion of cotton production in several foreign countries. Although exports of American cotton to countries on the European Continent are negligible at the present time due to restrictions caused by military operations, movements to Great Britain, Japan and Canada are being fairly well sustained. According to commercial reports, shipments to those countries between the middle of June and August 1 accounted for about nine-tenths of total exports for that period. Cotton mill activity in Great Britain and the Orient has declined considerably in recent weeks. The combined domestic consumption and exports of cotton from the United States during the past season amounted to 13,921,000 bales, which was 37 per cent greater than in the preceding season and 2,100,000 bales above the 1939 production of cotton in the United States. The excess of distribution over production caused a substantial withdrawal of cott~n from Government loan stocks, and, in addition, domestiC stocks of "free" cotton in commercial trade channels have been reduced to the lowest level since 1925. Data on the volume of American cotton consumed in foreign countries during ~he 1939-1940 season are incomplete, but available information indicates that consumption was somewhat smaller than exporti from the United States. In consequence, foreign stocks 0 American cotton at the beginning of the 1940-1941 season were probably considerably larger than a year earlier. DOMESTIC CONSUMPTION AND EXPORTS OF AMERICAN COTTON MLUONS OF A.JNNING e.<~I MILLIO>!5 OF RUNNING BALES 12 f2l • DOMESTIC CONSUMPTK>N EXPORTS 10 --: e .2 0 ~6 ~ - -